Russia’s Economic Forum Overshadowed by War and Rising Financial Uncertainty

At the St. Petersburg International Economic Forum this week, economic hardship was on everyone’s mind—whether they said it outright or not.

When one Russian MP asked me, “Are you going to bomb Iran?” the bizarre exchange reflected an unease that went beyond the economy itself.

President Vladimir Putin’s keynote speech on Friday began with a focus on economic growth, but what grabbed headlines was his comment afterwards: “Where the foot of a Russian soldier steps, that’s ours.”

For a leader hoping to attract investors, this bold talk of seizing territory hardly made a strong pitch. But Putin’s remarks underlined Russia’s true priority since the 2022 invasion of Ukraine: winning the war, even at the cost of economic progress.

While the Kremlin paints a rosy picture of growth powered by state spending on its military and defense industry, even that is losing steam. Putin dismissed concerns with a literary quip that rumors of Russia’s economic demise were “greatly exaggerated.” Yet nervousness was evident among officials at the forum.

Economic Development Minister Maxim Reshetnikov warned that Russia was “on the brink of recession,” while Central Bank Governor Elvira Nabiullina admitted that most of the unused capacity driving recent growth had now been exhausted.

Once seen as a polished showcase for Russia’s economy, the St. Petersburg forum this year reflected the deep scars left by Western sanctions and the exodus of international companies. Even as Kirill Dmitriev, Putin’s envoy for foreign investment, spoke of U.S. investors interested in returning, it was clear that any comeback would depend on an end to the war.

Robert Agee, president of the American Chamber of Commerce in Russia, noted that companies would need more than promises—they would need peace.

More than three years into the war, with inflation high and recession fears mounting, Russia faces an uncertain future. And as debate grows over the economy’s prospects, the path to recovery looks as unclear as ever.